Farmers who qualify obtain their credit needs through the use of loan guarantees, where a local agricultural lender makes and services the loan and the FSA guarantees the loan up to a maximum of 90 percent. The FSA also has the responsibility of approving all loan guarantees and providing monitoring and oversight of lenders' activities.
For those unable to qualify for a loan guarantee from a commercial lender, the FSA also makes direct loans. These loans are made and serviced by a FSA official, who has the responsibility of providing credit counseling and supervision to its direct borrowers. The FSA official accomplishes this by making a thorough assessment of the farming operation and by evaluating all aspects of the operation. For example, the FSA official evaluates the adequacy of the real estate and facilities, machinery and equipment, financial and production management, and the farmer's goals for the operation. Any weaknesses in each phase of the operation are identified and prioritized, and the FSA official then works one-on-one with each farmer to develop a plan of supervision to overcome the weaknesses which ultimately results in the farmer's graduation to commercial credit.
Unlike FSA's commodity loans, these loans can only be approved for those
who have repayment ability, and the loans must be fully secured and not be
nonrecourse loans. Local FSA offices have further information about these loans.